The only true "data/settings" backup is using Titanium or MyBackup Root which requires the device to be unlocked & rooted. The application and normally its important data is saved to /data/app/ which requires root access for these applications to touch those areas of your device.
Android's backup and restore will remember the apps which you downloaded and some associated settings. If you were to factory reset your device or switch to a new device it would redownload those apps on initial start up.
But for example if you were playing Angry Birds and wanted to save your progress the in the game the only way to do it is by rooting and using one of the mentioned 3rd party apps.
Tip: Always try and take advantage of any apps that have backup & restore options built into the settings of the app. Apps that come to mind for this are most 3rd party launchers (Nova, Go Launcher, ADW Launcher) or other apps like Dolphin Browser, ColorNote, etc..
Its slow going but more and more developers are starting to implement the option to backup and save app data/settings for the user so they don't have to turn to rooting and use of 3rd party applications.